# EUR-Lex - 52013DC0171 - EN

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# 52013DC0171

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Monitoring Report on Croatia's accession preparations /* COM/2013/0171 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL

Monitoring Report on Croatia's accession
preparations

1. Introduction

The Accession Treaty was signed on 9 December 2011, following the
Commission's favourable Opinion of October 2011 and the European Parliament's
assent of December 2011. Croatia will become a Member of the European Union on
1 July 2013, subject to the Accession Treaty being ratified by all Member
States. Currently 19 Member States, and Croatia, have ratified the Treaty and
the Commission expects all remaining Member States to do so in good time before
the date of Croatia's accession. As an acceding country, Croatia is enjoying
active observer status during the interim period until accession.

In the course of the negotiations, Croatia agreed to a number of
commitments, which have to be implemented by the date of accession, at the
latest, unless specific transitional arrangements have been agreed.

Article 36 of the Act of Accession requires the Commission to closely
monitor all commitments undertaken by Croatia in the accession negotiations,
focusing, in particular, on competition policy, judiciary and fundamental
rights, and justice, freedom and security. As an integral part of its regular
monitoring, the Commission has been issuing six-monthly assessments, on the
implementation of Croatia's commitments in these areas. The Commission adopted
a Monitoring Report on Croatia's accession preparations in April 2012[1] and a Comprehensive Monitoring
Report[2]
in October 2012 with Croatia adopting an action plan to follow up on their
recommendations.

In line with Article 36, this final Monitoring Report assesses the
progress made by Croatia in its preparations for accession in the period
between 1 September 2012 and 28 February 2013. This assessment is based on
information gathered and analysed by the Commission, including input provided
by Croatia, peer assessment missions as well as information shared by the
Member States, international and civil society organisations, in their regular
contacts with the Commission. The assessment is also based on the findings of
the updated half-yearly Monitoring Tables, a working tool aimed at following up
in detail all commitments undertaken by Croatia in the accession negotiations. The
assessment on the ten priority actions, identified in the Comprehensive
Monitoring Report as requiring particular attention is given separately for
each one, in the relevant thematic section.

2.
Commitments and requirements arising from the accession negotiations

2.1 Competition policy

Priority action Sign the privatisation contract for Brodosplit shipyard and take the necessary decisions to find a viable solution for the shipyards 3.Maj and Brodotrogir in order to complete the restructuring of the Croatian shipbuilding industry.

Croatia has completed this priority action. Following the
acceptance, by the Commission decision of 20 February 2013, of the second amendment
to the revised plan for the Brodosplit shipyard, the privatisation
contract was signed on 28 February 2013. The amendment envisages a modest
increase in the total amount of restructuring aid as well as additional
compensatory measures. As regards 3. Maj, Croatia informed the
Commission of its intention to submit a revised and consolidated restructuring
plan which is now based on the purchase of the yard by the Uljanik
shipyard. Croatia formally submitted a revised restructuring plan for Brodotrogir
on 12 February 2013 and initialled the privatization contract, sending it to the
Commission in accordance with Annex VIII of the Act of Accession. On 20 March
2013, the Commission gave its agreement on the revised restructuring plan and
on the privatisation contract. Croatia has committed to sign the privatization
agreement for Brodotrogir at the latest two weeks after a positive
decision by the Commission.

Croatia also meets the other commitments and requirements in the
field of antitrust, mergers and State aid. Its legislation
is aligned with the acquis, its administrative capacity sufficient and
its enforcement record satisfactory. The Croatian Competition Agency (CCA) is
fully operational and functionally independent. In October 2012 the CCA sent to
the Commission its last six-monthly report with details on the number and type
of decisions adopted, as well as assessment and opinions in the fields of antitrust
and mergers, and State aid. The CCA adopted, in December 2012, a decision in
the field of antitrust concerning regional bus carriers where a significant
fine was imposed. Also, the same month, proceedings against a telecommunications
provider were initiated.

With regard to Croatia's reporting obligations arising from Annex
VIII to the Act of Accession, Croatia submitted the third report on the steel
industry in Croatia in December 2012 and the six-monthly report on the
restructuring of the Croatian shipbuilding industry in January 2013. The
reports meet the required conditions for the Commission to carry out its
assessment.

Concerning the steel sector, the bankruptcy proceedings initiated in
March 2011 against Željezara Split continued. The CMC Sisak (now ABS Sisak)
steel mill was sold to a new investor, who is consulting with the CCA on the
amount to be reimbursed in accordance with the obligations of Annex IX to the
Act of Accession.

As regards existing aid, the CCA has been submitting new measures
and schemes to the Commission services for evaluation, as required by Annex IV
to the Act of Accession.

2.2 Judiciary and fundamental rights

1) To continue to ensure effective implementation of its judicial
reform strategy and action plan.

Implementation of the judicial reform strategy (2011 – 2015) and
action plan has continued. The legislative framework has been further improved,
in particular with a view to increasing the efficiency of the judicial system.
The process of rationalisation of the judicial network has continued.

A new strategy for the development of the judiciary for 2013-2018
was adopted by Parliament in December 2012. The strategy was prepared in close
consultation with the Council for monitoring the implementation of the Judicial
Reform Strategy. The main focus of the new strategy is on the efficiency of the
judiciary.

The long-term employment plans for judges and prosecutors for
2013-2025 were adopted by the Ministry of Justice in October 2012. Human
resources planning and management remain to be improved further, in particular
in the context of rationalisation of the court network.

The budget for the judiciary slightly decreased and amounts to
around € 313 million for 2013 (2012: € 337 million), which is considered
sufficient. The budget for investment in courts' infrastructure has been
increased by 50% and amounts to around € 8 million.

2) To continue to strengthen the independence, accountability,
impartiality and professionalism of the judiciary.

The reformed State Judicial Council (SJC) and State Prosecutorial
Council (SPC) have continued to operate independently. Both bodies have
continued to appoint judicial officials based on transparent, uniform and
objective criteria. In the period September 2012 – February 2013, 40 judges were
appointed. A number of recruitments foreseen under the 2011 and 2012 recruitment
plans still need to be completed.

Starting from 1 January 2013, a new system of appointments of judges
to first instance courts applies in full, following the expiry of the
transitional period. It requires all candidates to have completed the State
School for Judicial Officials. The two years' training for the first intake of
candidates for the State School for Judicial Officials was completed in
November 2012. After adoption of the Ordinance
on the final exam and final evaluation in the State School for Judicial
Officials in February 2013 the final exams are scheduled to take place in May
2013. The training for the first year of the second intake of candidates for
the State School for Judicial Officials started in September 2012 (the SPC
selected 35 and the SJC 20 candidates).

The amendments to the State Judicial Council Act, which were adopted
in February 2013, exempt the President and those members of the State Judiciary
Council who are judges from their normal duties by 75 % and by 50% respectively.
This is a positive step with a view to strengthening the capacity of the SJC. Additional
administrative resources need to be provided to enhance its efficiency. It is
important that the SJC increases its transparency and demonstrates
accountability in carrying out its tasks. Further reforms should include a
mechanism for judicial review of decisions, public sessions and an extended obligation
to provide reasoned decisions.

The SJC and SPC have continued implementing the new system of asset
declarations in cooperation with the tax administration. Disciplinary
proceedings have been initiated against judges who did not submit their declaration
of assets within the deadline, and in the majority of cases sanctions
(reprimands) have been imposed. As to the verification of data, the checks
carried out on the basis of the information received from the Tax
Administration have not yet been completed.

Disciplinary measures are being taken in cases of wrongdoing by
judicial officials. Both SJC and SPC became more proactive and continued
developing a track record of decisions rendered and sanctions imposed. The new
Courts Act adopted in February 2013 limits the immunity of judges and thus brings
secondary legislation in line with the Constitution.

The good work done so far by the Judicial Academy should continue
and its activities and management need to be supported by all main stakeholders
in the judiciary. Professional life-long training of judges and prosecutors is
key to improving the quality of the judiciary. Professional training programmes
should continue, including increased training on EU law. Croatia participated
in the Criminal Justice programme and in training activities organised by the
European Judicial Training Network.

3) To continue to improve the efficiency
of the judiciary

Priority action Implement the immediate and advance on the short-term measures elaborated in September 2012 for increasing the efficiency of the judiciary and reducing the court backlog.

Croatia has completed this priority action. Croatia has implemented
the immediate and short-term measures elaborated by the Ministry of Justice in
September 2012 with a view to increasing the efficiency of the judiciary and
reducing the court backlog.

During 2012, the courts overall managed to solve more cases than the
influx. The backlog of civil, commercial and enforcement cases continues to be
above the EU average. In its efforts to improve the efficiency of the judicial
system in a sustainable manner, the Ministry of Justice has successfully created
an advanced tool for statistical analysis of the performance of the judicial
system, which is expected to enable it to allocate human and financial
resources to resolve the incoming workload and the backlog. The new statistical
system can become operational nationwide as soon as all courts are equipped
with the Integrated Case Management System (ICMS).

Good progress has been made in the introduction of the ICMS in the
remaining 33 municipal courts, planned to be completed by September 2013. A
single comprehensive system for the statistical monitoring of case handling
remains essential.

In 2012, 110 civil servants were permanently employed in order to
fill vacancies and 250 additional civil servants were temporarily employed. A
significant part of appointments of judges planned for 2012 were postponed to
2013. In 2012, 27,013 cases from overburdened courts were delegated by a
decision of the Supreme Court (in 2011: 6,123). In 2012, the possibility of
temporary or permanent voluntary mobility of judges to support overburdened
courts was increasingly used. In 2012, overall 48 judges were transferred
permanently (in 2011: 13) and 22 temporarily (in 2011:6). In 2012, a total of
23 judicial inspections were carried out. Alternative dispute resolution has
been increasingly used in cases where State and State-owned enterprises were
involved and should be further promoted.

A new Courts Act was adopted by Parliament in February 2013. It
strengthens the supervisory authority of court presidents, in particular as
regards efficient court performance and introduces a mechanism for protection
of the right to trial within reasonable time. In addition to the reforms
introduced by the new Courts Act, Court presidents should develop annual
management plans, which need to be monitored. The exchange of best practices
developed in individual courts should be encouraged.

Amendments to the State Judicial Council Act, adopted in February
2013, provide for increased transparency of the transfer of judges and will
facilitate horizontal mobility. In February 2013 Amendments to the Civil
Procedure Act were adopted, which limit the possibility of multiple referral of
cases from higher to lower instances, introduce electronic summoning in
Commercial Courts, as well as stricter rules for presenting new evidence. The
possibility for the appellate court to refer a case back to the lower instance could
be further limited to extraordinary circumstances.

The new
Framework Criteria for the Performance of Judges adopted in December 2012
increase incentives for solving very old cases but would need to better reflect
the types and complexity of cases, the size of the court, the level of
specialisation, and the level of jurisdiction concerned. Draft Amendments to
the Misdemeanour Act and to the Land Registry Act are planned to be adopted at
the end of March/beginning of April. All these legislative measures are
expected to contribute to increasing the efficiency of the judicial system and
reducing the current backlog, if properly implemented.

Priority action Adopt the new enforcement legislation, in order to ensure the execution of court decisions and reduce the backlog of enforcement cases.

Croatia has completed this priority action. The new Enforcement Act
and amendments to the Act on the Implementation of the enforcement of monetary
funds entered into force on 15 October 2012. The new system concentrates
enforcement in municipal courts and thus unburdens commercial courts. Municipal
courts are responsible only for non-monetary enforcement, while monetary titles
are enforced directly and exclusively by the Financial Agency (FINA). A
decrease in the number of enforcement cases to be handled by the courts and an
improvement of the clearance rate is already noticeable.

The Ministry of Justice upgraded the ICMS in order to register and
calculate the recovery rate, as a key indicator for the effectiveness of the
enforcement system. It has also started working on further reform measures to
increase the transparency and efficiency of enforcement on immovable property.

4) To continue to improve the handling
of domestic war crimes cases.

Regarding the processing of domestic war crimes, one new
investigation was launched, six indictments were raised, and eight non-final
judgements were rendered. A new list of national and regional priority cases in
the framework of the strategy for addressing impunity has been established.
Further efforts are needed to impartially tackle impunity with a particular
focus on initiating and speeding up investigations.

Following the verdict of the International Criminal Tribunal for the
former Yugoslavia (ICTY) on the Gotovina/Markac case in November 2012, the State
Attorney's Office requested from ICTY the entire documentation from the trial
against the three Croatian generals (Gotovina, Markac, and Cermak), in order to
assist in the efforts of detecting and prosecuting perpetrators of crimes
committed during and after the military operation "Storm". Croatia
has already received, from the ICTY, the Court's files.

The Constitutional Court ruling on the Law on invalidation of
certain legal acts of the judicial bodies of the former Yugoslav National Army,
the former Socialist Federal Republic of Yugoslavia and of the Republic of
Serbia is still pending. Nevertheless, bilateral cooperation with Serbia has
continued. Croatia has also continued to participate in regional cooperation
concerning the handling of war crimes cases and has submitted data and
documents to the War Crimes' Prosecutor of Serbia and the Supreme State
Prosecutor of Montenegro.

The administrative capacity of the specialised courts has been increased.
It is expected that the entry into force of the new Criminal Code on 1 January
2013 will significantly unburden the specialised courts and allow them to focus
more on serious forms of crime, including war crimes. Still, a more pro-active
approach in tackling impunity would require enhanced administrative capacity,
in order to cope with an increased number of cases.

In terms of other measures for improving the handling of war crimes,
the Judicial Academy included training on war crimes in its 2013 programme.

The independent sector for victims and witness support at the
Ministry of Justice and the departments for victims and witness support at
County courts continued to facilitate the attendance of witnesses in war crimes
trials. Continued attention needs to be given to the protection of witnesses.

On 23 January 2013 the Municipal Court in Knin rendered a judgement
that the Croatian State must pay compensation to the children of Serb victims
killed in the village of Varivode after the Operation "Storm",
regardless of the fact that the perpetrators are unknown. It thus addressed for
the first time a long-standing grievance relevant for other, similar, cases. The
issue of compensation for the civilian victims of war crimes should now be
systematically tackled.

5) To continue to ensure a sustained track record of substantial
results based on efficient, effective and unbiased investigation, prosecution
and court rulings in organised crime and corruption cases at all levels
including high level corruption, and in vulnerable sectors such as public
procurement.

The legal and institutional framework for the suppression of
corruption and organised crime is adequate. With the entry into force of the
new Criminal Code on 1 January 2013, penalties in a number of areas have been
increased, including for corruption offenses. A track record of implementation
continues to be developed. Law enforcement bodies remain proactive, including
in higher-level corruption cases (e.g. former mayors, former deputy ministers)
and corruption in law-enforcement institutions (several police officers).
Developments also include the first-instance judgement in a case against a
former prime minister in November 2012.

Overall the level of sentences in organised crime cases remains low.
Also in the area of corruption court sentences are low; very often suspended
sentences are pronounced. Effective and dissuasive sentences in
cases of corruption and serious and organised crime are needed to continue developing
a sustained track record and avoid creating a climate of impunity.

The total amount of assets seized and confiscated remains limited.
The legal framework for the seizure and confiscation of assets needs to be
implemented more consistently and forcefully. So far, the tool of confiscation
of criminal assets is not used for the purpose of disrupting the financial
basis of a criminal organisation.

The fight against local-level corruption needs to be further
enhanced, particularly in the vulnerable sector of public procurement. Regarding
the system for checking on dismissals of criminal cases by the prosecutor, the
current system does not provide for independent checks on decisions by State
prosecutors to dismiss reports of crime.

6) To continue to improve its track record of strengthened
prevention measures in the fight against corruption and the conflict of
interest

Croatia continued strengthening its legislative framework of prevention
of corruption and conflict of interest, which now needs to be effectively
implemented. Croatia needs to increase its efforts to establish a track record
of substantial results in strengthening prevention measures. Moreover,
following the Constitutional Court ruling of November 2012, which annulled
several provisions of the Conflict of Interest Act regarding core competences
of the Conflict of Interest Commission (including its verification and
sanctioning powers), Croatia needs to ensure that immediate measures are taken
to put in place a strong and effective mechanism for preventing, detecting and
sanctioning conflict of interest cases, based on thorough checks and deterrent
sanctions. A working group, including the Ministry of Public Administration and
civil society (GONG, Transparency International) has been established to
consider the necessary amendments to the law.

Priority action Establish the Conflict of Interest Commission so that it starts its regular working activities.

Croatia has completed this priority action. The members of the
Conflict of Interest Commission were appointed by Parliament on 25 January 2013
and took office on 11 February 2013. The Conflict of Interest Commission has
started processing requests submitted by officials for an opinion on whether in
their case conflict of interest exists and already issued several opinions. As
regards cases based on reports of alleged conflict of interest, the Commission
initiated procedures against 26 officials. The Conflict of Interest Commission
now needs to make sure that an effective mechanism for detection, prevention
and sanctioning of conflict of interest cases is in place, and to establish a
track record of checks and sanctions without delay.

Priority action Adopt the new law on access to information, in order to strengthen the legal and administrative framework in the area of access to information.

Croatia has
completed this priority action. In February 2013 the new Law on Access to
Information was adopted. The law introduces the so-called proportionality and
public interest test in all cases of denial of access to information and
implements the EU acquis on the re-use of information. It establishes also
a new institutional arrangement for monitoring the implementation of the law:
whereas, until now, the Data Protection Agency was dealing with both data
protection and access to information, the new law foresees the establishment of
a Commissioner dealing with access to information, appointed by Parliament. It
is important that in the exercise of their respective mandates the Data
Protection Agency and the new Commissioner on Access to Information ensure
coherence of decisions taken.

The Action Plan on anti-corruption is being revised with a view to introducing
adequate measures aimed at ensuring the effective monitoring of its
implementation and cover also aspects of suppression of corruption. The role
and capacity of the Ministry of Justice as the institution in charge of
defining, co-ordinating, and implementing the anti-corruption agenda should be
strengthened further.

With regard to other actions in this area, amendments to the Act on
the Financing of Political Activities and Electoral Campaign adopted in
February 2013 are designed to facilitate effective implementation of the law by
reducing regulatory complexity, streamlining financial information, and
reinforcing controls. The upcoming local elections will constitute a test for the
implementation of the improved rules.

The State Election Commission and the State Audit Office continued
applying the legislation on the funding of political parties and election
campaigns and notified the State Attorney's Office on the political parties and
independent members of the local and regional self-government units, who had
not submitted financial reports for 2011 or had not published them on their web
pages within the statutory term.

Concerning public procurement, transparency has increased in
accordance with the new legislation in force since January 2012. Information on
signed and executed contracts is published by all public bodies. Furthermore, Croatia
needs to take all necessary measures to prevent the occurrence of
irregularities in the procurement of projects to be co-financed under the
Cohesion Policy by the setup of a solid management and control system.

Croatia needs to ensure that a strong mechanism is in place to
prevent corruption in state-owned companies, including as regards membership of
the supervisory and management boards. Also, the legal basis for a professional
civil service through the establishment of a new salary system so as to ensure
merit-based promotion, reward mechanisms and retention of skilled staff, needs
to be completed.

The necessary mechanisms for the effective protection of
whistle-blowers need to be put into effect.

7) To continue to strengthen the protection of minorities, including
through effective implementation of the Constitutional Act on the Rights of
National Minorities (CARNM).

Implementation of the Constitutional Act on the Right of National
Minorities (CARNM) has continued. Regarding the employment of minorities in the
state administration and judiciary in the context of a low level of overall
recruitment, in November 2012, about 3.4% of the members of the state
administration belonged to national minorities. Following a more proactive
approach by the government, the target of 5% has been
reached for the new recruitment of 400 border police.

In November 2012, the government adopted the National Strategy for
Roma Inclusion for 2013-2020. The corresponding draft Action Plan was submitted
to public consultation and is planned to be adopted at the end of March 2013. Further
efforts are needed to ensure that Roma children complete primary and secondary
education. The government continued to take measures in order to raise
awareness for persons belonging to national minorities and ensure the exercise
of their rights. It is welcome that the government continues to ensure the
implementation of the constitutional provisions on the use of the Cyrillic
script in the city of Vukovar, where Croatians of Serb ethnicity account for
38.5% of the population.

Croatia continued to take measures to protect those who may still be
subjected to threats or acts of discrimination, hostility or violence. The
legal framework has been further strengthened in this respect: Amendments to
the Criminal Code were adopted in December 2012 in order to align the Criminal
Code with the acquis on combating certain forms and expressions of
racism and xenophobia by means of criminal law. A new Act on Misdemeanours
against Public Order and Peace will introduce the misdemeanour of violations
against public peace and order based on racial, ethnic, religious and other
grounds. The law is in parliamentary procedure and planned to be adopted by the
end of the second quarter of 2013. Specialised training of police officers on
the suppression of hate crimes has been stepped up.

8) To continue to address outstanding refugee
return issues.

Croatia has continued to engage with the other countries of the
region in the Sarajevo Declaration Process. The decision on validating pension
rights continues to be implemented.

The implementation of the Housing Care programmes for returning
refugees continues at a slow pace. Under the March 2011 plan for dealing with
the approximately 2,350 remaining applications by February 2013 366 (August
2012: 259) were settled, out of which 213 (August 2012: 139) families took over
the keys. By February 2013 1,497 (August 2012: 1,305) positive approvals for
housing care have been given.

There has been
limited implementation of the new purchase options under favourable conditions
for housing care beneficiaries. Twelve out of the remaining 15 unsolicited
investment cases are expected to be solved following a government decision to
be adopted at the end of March 2013; the other three cases are planned to be
solved by a special decision of the government in the third quarter of 2013.

9) To continue to improve the protection
of human rights.

Human rights continue to be generally well-respected. The Ombudsman
and specialised ombudspersons play an important role in human rights
protection. Continued attention needs to be paid to ensure that the Ombudsman's
recommendations are followed up. A new Ombudsman was elected on 15 February
2013. There continues to be a need for further strengthening the Ombudsman
offices. This includes providing adequate financing and office premises.

Croatia has further developed its track record of implementation of
the Anti-discrimination Act and legislation on hate crimes. Specialised training of police officers on the suppression of hate
crimes has been stepped up. The investigation and prosecution of cases of
intimidation and violence against journalists continued. The Ministry of
Justice prepared draft amendments to the Free Legal Aid Act and consulted on
them with relevant stakeholders. The amendments aim at facilitating access to
legal aid and fostering the role of NGOs as legal aid providers and are planned
to be adopted by the end of the second quarter of 2013.

Croatia has completed legal alignment in the fields of
anti-discrimination and equal opportunities.

10) To continue to cooperate fully with the International Criminal
Tribunal for the former Yugoslavia (ICTY).

Croatia's cooperation with the ICTY has continued.

2.3 Justice, freedom and security

Priority action Finalise and adopt the migration strategy, clearly defining measures for the integration of the most vulnerable groups of migrants.

Croatia has completed this priority action. The migration strategy
("Migration policy of the Republic of Croatia for 2013-2015"),
clearly defining measures for the integration of the most vulnerable groups of
migrants, was adopted by the Parliament in February 2013.

In the field of migration, alignment with the acquis
is almost complete. In 2012, 6,541 irregular migrants were identified (3,461 in
2011). The reception centres for irregular immigrants and asylum seekers are
reaching their maximum capacity. In order to increase the capacity and mitigate
the situation, the Ministry of Interior has taken over a former hotel where 400
asylum seekers can be accommodated and up to 600 people after minor
refurnishing. Additional temporary solutions have been found in the northern
and southern border areas, while waiting for the construction of two new
permanent aliens' centres to be financed under the Schengen Facility Fund. Croatia
has yet to start the construction of a separate facility for minors and other
vulnerable groups of migrants within the perimeter of the existing centre for
irregular migrants; for this, IPA funds have been already secured. The new
readmission agreement with Germany entered into force in November 2012.
Negotiations on a readmission agreement with Kosovo[3] are ongoing.

Preparations for the implementation of the asylum acquis
are almost complete. The administrative courts continued to operate as a
second-instance body for asylum applications; a selection procedure is
currently on-going to recruit additional judges. Training for border
police continued and asylum-related training for 66 border police officers
started in January 2013. The Asylum unit was
strengthened by additional staff. From 1 September 2012
to 9 January 2013, protection was granted to 16 applicants. Furthermore, in
that period, 63 applications were rejected and 300 proceedings suspended.
Additional accommodation of up to 600 places will be ensured in the hotel taken
over by the Ministry of Interior (see above), taking into account the
increased number of asylum seekers reaching Croatia (1,193 in 2012 compared to
807 in 2011). There are currently two EURODAC stations for the entire country,
with additional 30 foreseen. In the meantime, Croatia needs to ensure the
registration of asylum seekers when entering the country by using the existing
scanners at the main border crossing points.

Legislative alignment regarding visa policy is almost
complete. On visa requirements, Croatia has further aligned its legislation
regarding the list of countries whose nationals require a visa to enter
Croatian territory with Regulation 539/2001. As of 1 November 2012, the
Decision on temporary suspension of visa regime for nationals of Azerbaijan,
Kazakhstan, the Russian Federation and Ukraine ceased to apply. Negotiations on
a new visa regime with Turkey are on-going; it will be introduced on 1 April
2013. As regards the Russian Federation, the agreement on mutual travelling of
nationals will enter into force by the end of March 2013. Training for consular
officers continued, aiming at posting them in the new consulates which will
become operational by April 2013.

As regards external borders and Schengen, legislative
alignment is almost complete. The 2013 revision of the Integrated Border
Management Action Plan (IBM AP), in view of aligning the national concept with
the EU one, is in preparation. The first phase of the
establishment of the Zadar Maritime Surveillance Centre, including the
purchasing of equipment, has been completed and its staff reinforced. The
second phase is underway and is to be completed by April 2013 to ensure the
link between systems of different ministries. The implementation of the working arrangements with Frontex, including
participation in joint operations, continued. Croatia's contact point with
Frontex was established in Bajakovo BCP.

Priority action Complete the construction of border crossing points at the Neum corridor.

This priority action is expected to be completed imminently. The
works for the construction of` the border crossing points (BCPs) of the Neum
corridor (Klek and Zaton Doli) have accelerated substantially. They are nearing
completion and need to be fully operational by the date of accession. Nova Sela
BCP, close to Metkovic, is also about to be completed; once in operation, this
BCP will also become the common contact point with Bosnia and Herzegovina.

The new acquis-compatible Local Border Traffic Agreement with
Bosnia and Herzegovina has been prepared and is expected to be signed, together
with the agreements on BCPs, by the end of May. As regards cooperation with the
other countries of the region, Croatia prepared and submitted to Serbia and to
Montenegro two protocols on joint patrols and on exchange of information on
border control. Talks with the two countries to bring bilateral agreements on local
border traffic in line with the acquis continued. The agreements need to
be in compliance with the acquis by accession. Joint patrols are
on-going.

Priority action Achieve the established recruitment target for border police for 2012.

Croatia has completed this priority action. The recruitment of 467
border police officers has been achieved, thus reaching Croatia's target for
2012. In January 2013, the total number of border police officers was 6,338,
out of which 4,971 police officers were allocated to the future external
border. Recruitment will continue with 100 new police offers during 2013,
including specialised maritime personnel for the blue border. Specialised
training for the police has continued and the updated version of Common Core
Curriculum (CCC) was sent to the Police academy in order to draft the
corresponding specialized border police course programme. Training for maritime
police needs continued attention.

The National Border Management Information System (NBMIS) at the
border crossing points located at the future external border is, as of January
2013, operational at 76 BCPs. Croatia shall ensure that these are increased to
93 BCPs in June 2013, as planned. Additional technical equipment was procured. Activities
have started to set up the EUROSUR centre; premises have been found. Concerning
inter-agency cooperation on IBM issues, coordination meetings continued.

Concerning the fight against corruption in
border management, a total of 2,681 unannounced
inspections were conducted in the period from 1 September 2012 to 31 January
2013.

Croatia has continued the process of alignment with the relevant
Schengen acquis, as well as its implementation and enforcement. The first draft of the revised Schengen Action plan has been
prepared. The Ministry of Interior is in the process of preparing an Indicative
Programme regarding the Schengen Facility Fund. It is important that Croatia is
duly prepared for the implementation of the Schengen Facility and Solidarity
and the Management of Migration Flows (SOLID) Funds

Croatia's preparations for the alignment of its legislation in the
field of judicial cooperation in civil and criminal matters are almost
completed. Following the agreements with Montenegro and Kosovo on mutual legal
assistance in criminal matters, Croatia signed a similar agreement with Bosnia
and Herzegovina in November 2012. A new Act on International Private Law is
expected to be adopted in the first half of 2013. The agreement on mutual
execution of criminal judgments with Montenegro and the agreement on
extradition with the former Yugoslav Republic of Macedonia entered into force.
As regards the institutional setting, the number of contact points for the
European Judicial Network increased, to cope with the obligations stemming from
the EU accession; good cooperation has continued with EUROJUST. A service on
mutual assistance on extradition and criminal matters was established within
the Ministry of Justice. The Act on Judicial Cooperation in Criminal Matters
with EU Member States remains to be adopted.

Priority action Complete the adoption of related by-laws, to ensure the implementation of the police law.

Croatia has completed this priority action. All 36
by-laws were adopted in 2012 and are applicable as of 1 January 2013. The legal
framework for the full implementation of the police law is, therefore, in
place.

Croatia's preparations in the alignment with the acquis
in the area of police cooperation and the fight against organised crime are almost complete.

The Supplementary Information Request and National Entry
(SIRENE) Bureau is now legally established; its Head was appointed in December 2012 and five police officers are currently
working there. The recruitment process for the rest of the staff is on-going. Five
persons are working on the Schengen Information System in the IT department of
the Ministry of Interior. Close cooperation with EUROPOL continued.

The track record for fighting organised
crime continued to develop; new cases were reported, including on drug
trafficking, as well as for the misuse of EU funds. The level of sentencing
often remains low and thus not dissuasive enough compared to the gravity of the
crime. This is particularly so for cases of trafficking in human beings. Criminal
assets continued to be seized, however, frequently in small amounts which as
such do not disrupt criminal financial flows. Hence, legal provisions on
seizure and confiscation of assets need to be implemented more consistently and
forcefully. Inter-agency cooperation has significantly improved and good
results were achieved by the Financial Intelligence Unit (FIU); in the period
July-December 2012 the FIU received a total of 288 suspicious transactions
(STRs) out of which three related to terrorism financing and 285 to money
laundering. Out of the 288 STRs, 164 cases have been opened. Under the Criminal
Procedure Act, victims of serious crimes are entitled to compensation from the
state budget. Concerning trafficking in human beings, the new Criminal Code,
which entered into force on 1 January 2013, contains an amended definition of
trafficking in human beings which now is aligned with international standards as
it makes a clear distinction between slavery and trafficking. The head of the National Committee for suppression of trafficking
in human beings was appointed in November 2012 and the Committee held its first
session in December 2012. It urgently needs to take pro-active and concrete
measures to address trafficking in human beings and raise awareness amongst the
national authorities on this form of crime, including by launching an
independent evaluation of the policy and to intensify outreach actions in places where victims or
potential victims of trafficking are likely to be abused. Training for judicial
and law-enforcement personnel on trafficking in human beings needs to continue,
especially to detect victims of trafficking at the main BCPs and to better
distinguish trafficking and smuggling of migrants. The low number of identified
victims of human trafficking is a point of concern. Croatia needs to step up
efforts to proactively identify trafficked victims, in particular among
vulnerable sectors of the population. It should investigate, prosecute and
convict trafficking offenders and ensure sentences are commensurate with the
seriousness of the offence committed. To this end, administrative and law
enforcement capacities need to be strengthened.

Training has continued on anti-money laundering
and cooperation amongst authorities on this specific form of crime was
fostered. The number of cases recorded in 2012 remains low.

2.4 Other acquis chapters and economic issues

Croatia is meeting the commitments and
requirements arising from the accession negotiations and will be in a position
to implement the acquis as of accession.

In its Comprehensive Monitoring Report of
October 2012, the Commission had identified a limited number of Chapters where
increased efforts were required by Croatia. These were Chapters 11 – Agriculture
and rural development, 12 – Food safety, veterinary and phytosanitary
policy, 13 – Fisheries, 22 – Regional policy and coordination of
structural instruments and 27 – Environment.

In the field of agriculture and rural development, Croatia
has finalised the legal framework for direct payments for 2013. The Paying
Agency received the provisional accreditation for direct payments and for
horizontal matters in December 2012. The Croatian authorities now need to
follow the recommendations delivered to the Paying Agency. By the end of 2013,
Croatia needs to accredit the paying agency for the management of the rural
development funds and advance in the preparation of the rural development
programme 2014- 2020.

In the field of food safety, veterinary
and phytosanitary policy, Croatia has accelerated the construction and
equipment of the seven Border Inspection Posts (BIPs). Croatia needs to ensure
that the BIPs are finalised in time so that they can be accredited by the
Commission and operate in full compliance with the acquis by the date of
Croatia’s accession.

In the field of fisheries, legislative alignment and
implementation of the acquis in the areas of fleet and resources
management is nearing completion, as well as structural measures and the
preparation of the national management plans. Croatia now needs to step up its
efforts to finalise its work in the areas of inspection and control, finalising
the phasing-out of the category of subsistence fisheries and completing the
satellite-based vessel monitoring system in accordance with the agreed
timelines.

Concerning regional policy and the
coordination of structural instruments, Croatia was able to demonstrate
that it fulfils the conditions for the waiver for ex-ante controls for all IPA
components. Croatia needs to step up building the administrative capacity in
the relevant structures, finalise investment strategies and intensify the
preparation of a pipeline of high quality and mature projects as the numbers of
co-funded projects, of sectors touched and of interlocutors will substantially
increase over the time. A fully functioning management, monitoring and
evaluation system needs to be established for the future European Structural
and Investment Funds. Croatia needs to ensure that all relevant and necessary
procedures are put in place to ensure an effective, regular and transparent use
of the European Structural and Investment Funds, especially as far as public
procurement is concerned.

With regard to the environment and climate change, administrative
capacity has been strengthened. Concerning the environment, legislative
alignment and implementation are nearing completion. Particular attention needs
to be paid to ensure proper environmental impact assessments for all investment
projects, the timely issuing of permits and the upgrading of the Industrial
Pollution Control and Risk Management (IPPC) installations. With regard to
climate change, the transposition of the geological storage of CO2 Directive
needs to be completed. Croatia needs to ensure the implementation of the EU
Emissions Trading System, in particular the full monitoring of and reporting on
installations, and prepare for the inclusion of aviation, in accordance with
agreed timelines.

Priority action Increase the capacity to translate and revise the acquis so that this task can be completed in time for accession.

Croatia has completed this priority action. Croatia has considerably
increased the pace of translating and revising the acquis thanks
to an improved internal organisation, additional staff and support provided by
EU institutions. The number of translated and revised pages increased to more
than 118,000 pages (13 March). Provided Croatia maintains this speed over the
coming weeks the translation and revision work will be finalised in time before
accession.

Some important initial steps have been taken regarding the implementation
of urgently needed structural reforms in the economy, to improve
competitiveness and growth prospects. Croatia's informal participation in the
2013 European Semester provides a good opportunity to develop the structural
reform agenda further and to pursue its vigorous implementation. Within this
framework, the Commission will assess the Economic Programme to be submitted by
Croatia in April.

In the field of taxation, Croatia introduced in November 2012
a new reduced VAT rate on yachts (sport and pleasure boats), which is contrary
to the EU acquis but which will be aligned by accession. This may
encourage releasing boats for free circulation in Croatia before accession.
Croatia should without delay reverse this situation.

The Commission welcomes the signing by Croatia and Slovenia of a
Memorandum of Understanding, in March 2013, defining a mutually acceptable
solution to the issue of the transferred foreign currency savings of the
Ljubljanska banka in Croatia.

3.
Conclusions

Croatia
is generally meeting the commitments and requirements arising from the
accession negotiations, in all chapters. Croatia has demonstrated its ability
to fulfil all other commitments in good time before accession. Where required,
clear work plans are available or about to be finalised for completing the
remaining work, including in the fight against corruption, in the months ahead.

Moreover,
Croatia has completed the ten priority actions identified in the Commission's
Comprehensive Monitoring Report of October 2012. The Commission is therefore
confident that Croatia will be ready for membership on 1 July 2013.

Croatia's forthcoming accession is the result of 10 years of a
rigorous process, which started with its application for membership in 2003. EU
membership is an additional incentive to continue reforms in Croatia. Building on the achievements to-date, Croatia is expected to
continue developing its track record in the field of the rule of law, notably
in the fight against corruption. EU membership also
offers many and substantial opportunities for Croatia and the EU. These
opportunities now need to be used, so that Croatia's participation in the EU
will be a success – to the benefit of Croatia itself, of the Western Balkans region,
and of the EU as a whole.

[1]               COM(2012) 186 final.

[2]               COM (2012) 601 final and SWD(2012) 338 final.

[3]               This designation is without prejudice to positions on
status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo
Declaration of Independence.